Franchise registration FAQ - franchiseyourbusiness-now.com · 2013 FranchiseNow Franchise Registration Guide –14 States 4 | P© a g e Intro These 14 states require a franchisor

2 | P a g e © 2013 FranchiseNow Franchise Registration Guide – 14 States

Table of Contents Intro ...................................................................................................................................................... 4 Helpful links: ........................................................................................................................................ 4 California .............................................................................................................................................. 5

Key Websites: ................................................................................................................................... 5

Primary contact: ................................................................................................................................ 5 Registration Fee: ............................................................................................................................... 5 List of Documents for Franchise Registration/Renewal ................................................................... 5 Franchise Registration Application Instructions ............................................................................... 6

2007/2008 Changes in California Franchise Registration Requirements........................................ 12 Hawaii ................................................................................................................................................ 14

Key Websites: ................................................................................................................................. 14

Primary contact: .............................................................................................................................. 14 Registration Fee: ............................................................................................................................. 14

Franchise Registration Application Instructions ............................................................................. 14 Primary contact: .............................................................................................................................. 18

Registration Fee: ............................................................................................................................. 18 Franchise Registration Application Instructions ............................................................................. 18

Indiana ................................................................................................................................................ 23

Key websites:.................................................................................................................................. 23

Primary Contact: ............................................................................................................................. 23 Initial Registration Requirements: .................................................................................................. 23 Renewal Registration Requirements: .............................................................................................. 23

Maryland ............................................................................................................................................ 24 Key Websites: ................................................................................................................................. 24

Primary contact: .............................................................................................................................. 24 Registration Fee: ............................................................................................................................. 24 Franchise Registration Application Instructions ............................................................................. 24

Required State License(s): .............................................................................................................. 26 FAQ’s (from Michigan state office of attorney general website) ................................................... 26

Minnesota ........................................................................................................................................... 28

Key Websites: ................................................................................................................................. 28 Primary contact: .............................................................................................................................. 28 Franchise Registration Application Instructions ............................................................................. 28 Registration Fee: ............................................................................................................................. 29

New York ........................................................................................................................................... 30

Key Websites: ................................................................................................................................. 30 Primary contact: .............................................................................................................................. 30 Franchise Filing Fee: ...................................................................................................................... 30 Franchise Registration Application Instructions ............................................................................. 30

North Dakota ...................................................................................................................................... 33

Key Websites: ................................................................................................................................. 33

Franchise Registration Fee: ............................................................................................................ 33

Franchise Registration Application Instructions ............................................................................. 33


FAQ’s from the Division of Finance and Corporate Securities (DFCS) ........................................ 35 Rhode Island ....................................................................................................................................... 38

Key Websites: ................................................................................................................................. 38 Primary contact: .............................................................................................................................. 38 Franchise Registration Fee: ............................................................................................................ 38 Franchise Registration Application Instructions ............................................................................. 38

RHODE ISLAND FRANCHISE REGISTRATION APPLICATION ENCLOSE CORRECT

FEE WHEN APPLICATION IS INITIALLY FILED ............................................................... 38 Franchise Registration Requirements (South Dakota Legislature): ................................................ 43

Virginia ............................................................................................................................................... 45 Key Websites: ................................................................................................................................. 45

Primary contact: .............................................................................................................................. 45 Franchise registration FAQ’s: ......................................................................................................... 45

Washington ......................................................................................................................................... 47

Key Websites: ................................................................................................................................. 47 Primary contact: .............................................................................................................................. 47 Franchise Registration Application Instructions ............................................................................. 47 Registration Fee: ............................................................................................................................. 48 Surety Bond Requirement: ............................................................................................................. 48

Wisconsin ........................................................................................................................................... 49 Key Websites: ................................................................................................................................. 49

Primary contact: .............................................................................................................................. 49

Franchise Registration Application Instructions ............................................................................. 49


Intro

These 14 states require a franchisor to register its FDD and maintain a registration with the

state agency indicated. If the company is authorized to sell franchises in one of these states,

the company will be registered with the agencies listed here.

Helpful links:

http://www.ftc.gov/

http://www.nasaa.org/

http://www.aafd.org/

http://www.franchisee.org/

http://www.franchise.org/

http://www.nationalfranchisecouncil.org/

http://www.ftc.gov/

http://www.nasaa.org/

http://www.aafd.org/

http://www.franchisee.org/

http://www.franchise.org/

http://www.nationalfranchisecouncil.org/


California

Key Websites:

http://www.corp.ca.gov/SRD/ufdd.asp

http://www.corp.ca.gov/srd/franchise.asp

http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=corp&codebody=&hits=20

Primary contact:

Call (866) 275-2677

Department of Corporations: 916-445-7205

Franchise Division

Department of Corporations

1515 K Street

Sacramento, CA 95814

(916) 445-7205

Registration Fee:

Registration of an offer or sales of franchise: $675.00

Registration renewal statement or annual report: $450.00

List of Documents for Franchise Registration/Renewal

The applicant should make every effort to utilize the following naming conventions to facilitate

our electronic processing and the documents should be listed in the following order. The

exhibits may be renumbered and documents may be added or deleted from the list below.

Document index

CD #1

Application Transmittal Letter

Application Facing Page

Certification Page

Consent to Service of Process (not required for a CA corporation, limited partnership or

limited liability

company)

Corporate Acknowledgement

Supplemental Information

Sales Agent Disclosure Forms (redacted)

http://www.corp.ca.gov/SRD/ufdd.asp

http://www.corp.ca.gov/srd/franchise.asp

http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=corp&codebody&hits=20


Guarantee of Performance (if any)

Auditor’s Consent

Franchise Offering Circular/Disclosure Document (clean/marked copy)

Receipt

Exhibits:

Franchise Agreement (clean/marked copy)

Financial Statements

Area Development Agreement (if any)

List of Administrators

Agents for Service of Process

List of Franchisees

List of Former Franchisees

State Specific Appendix

Other Exhibits

CD #2

Customer Authorization of Disclosure of Financial Records

Sales Agent Disclosure Forms (un-redacted)

Franchise Registration Application Instructions

COVER LETTER:

Please acknowledge in your cover letter of the application whether any

documents or exhibits will be submitted at a later time.

The cover letter should tell the Department the date of the franchisor’s fiscal

year end, and acknowledge that the registration (normally) will end 110 days

after the date of its next fiscal year. This will coordinate registration renewal

with the required fiscal year end audited financial statements, and will reduce

the need to submit interim statements.

If the franchisor offered or sold securities in California under the California

Corporate Securities Law of 1968, the franchisor must describe these

transactions in the cover letter and indicate whether the securities were

qualified or exempt and/or make any required filings.

4. FO RMS FOR T HE FRANCHI SO R’S APPLICATIO N:

A. Application Cover Page. See attached page 48.

B. An authorized officer, manager or general partner should sign the application. See

Form C on attached pages 49 and 50. A person holding a power of attorney may

sign if the authorizing corporate resolution is included.

Copyright 2011 - FranchisePrep 10 | P a g e

C. Supplemental Information Page. See Form B on attached page 49.

D. Sales Agent Disclosure Form. Complete a form only for each person offering and

selling the franchise in California, unless the person is named in Item 2 of the

Offering Circular. See Form E on attached page 52. Send a clean copy (marked

CONFIDENTIAL) and one that redacts (blacks out) home address and telephone

number, SSN and birth date.

E. One copy of the Offering Circular in the Uniform Franchise Offering Circular

(UFOC) format in this packet (UFOC as adopted by NASAA on April 25, 1993).

See the attached pages 1 through 53. Note the Mandatory Disclosure

Requirements outlined in Rule 310.114.1 that make some changes to the format

(attached for your convenience).

F. Consent to Service (not required for a California corporation but is required for all

other California entities such as an CA LP or CA LLC and foreign entities). Use

Form D on attached page 51.

G. Customer Authorization Form [QR 500.265, see also Corporations Code

§31111(b)] is attached and follows page vii.

H. Send only one set of all documents.

5. REQUIRED FINANCIAL STATEMENTS FOR REGISTRATION:

Normally the application must include the franchisor’s financial statement

audited by an independent certified public accountant (CPA) in accordance

with generally accepted accounting principles (GAAP) (See Rule 310.111.2

for requirements). With your application, you must include a manually signed

consent of the independent public accountant for the use of the audited

financial statements in the UFOC. The Department will not accept

“Compilation” report financial statements unless they are interim financials,

submitted with “Audited” report financials. The use of audited financial

statements does not relieve the applicant or any person from liability for false

and misleading statements contained in the financial statements.

The Department may accept a current “Review” report balance sheet instead

of an audit if:

A. It is the franchisor’s first registration application in California and the franchisor

has no prior audited financial statements;

B. The “Review” report balance sheet is as of a date within 90 days of the application

filing date;

C. The financials include profit and loss statements covering the prior three years, or

from inception of the business; a Statement of Cash Flow, and appropriate

footnotes;

D. The “Review” report conforms to American Institute of Certified Public

Accountants standards.

6. IMPOUND:


The franchisor must demonstrate its present financial ability to meet its obligations to

the franchisee stated in the UFOC and Franchise Agreement, without relying on the

proposed franchisee’s funds. Otherwise, the Commissioner will impound all initial

fees paid by the franchisee to the franchisor. If an impound is required, you must

submit a copy of the form of Purchase receipt, and the written consent of the

Depositary. (See Rules 310.113 though 310.113.2).

The franchisor may avoid an impound if an increase in franchisor’s

capitalization shows financial ability to meet its proposed obligations or by

posting a surety bond (see attached form) as per Rule 310.113.5. An

impound may also be avoided by an adequate Guarantee of Performance,

coupled with the Guarantor’s audited financial statements which shall be

included along with the Guarantee in the UFOC. These financials must show

the Guarantor’s financial ability to meet the franchisor’s obligations. Use Form

F on attached page 53.

7. PRE-EFFECTIVE AMENDMENT:

A PRE-effective amendment changes a pending application. The application

must include a facing page and a verification page. Underline or mark

documents to show changes from the previous filing. Send only the marked

copy. Do not send an unmarked copy. Do not highlight changes in color.

There is no fee to file a pre- effective amendment, unless a balance fee is

owed on the previous filing.

A pre-effective amendment may also be filed within 6 months of an

abandonment of the application only if all the outstanding comments at the

time of the abandonment are addressed and the applicant must file an

application facing page marked as a pre-effective amendment/RE-

INSTATEMENT, with a certification page. The cover letter must specifically

mention that the applicant is seeking the reinstatement of an application that

was abandoned on a specified date.

8. POST-EFFECTIVE AMENDMENT:

A POST-effective amendment is submitted after a registration is effective. A

POST-effective amendment application includes a completed application

cover page, and a verification page. Mark the documents to reflect changes

from the prior filing. Send only this one marked copy of the document being

changed. Do not send an unmarked copy and do not send documents that

are not being changed. There is a $50 fee for filing a post-effective

amendment application.

After the franchisor is registered, it must file an application for post-effective

amendment when a material change occurs or to add sales agents. A post-

effective amendment application is effective as of the date an order is issued

indicating the effectiveness of the post-effective amendment.

9. RENEWAL:


Submit a renewal application in the same format as the original application.

Include all documents required for an initial registration. Please acknowledge

in your cover letter of the application whether any documents or exhibits will

be submitted at a later time and state the fiscal year.

The franchisor’s financial statement for the most recent fiscal year must be

certified as an audit by an independent CPA. Submit a manually executed

auditor’s consent for use of the financial statement in the UFOC.

Send one complete, updated, clean copy of the UFOC and exhibits. If a

document is revised, send one copy of the changed pages only with the

changes marked. Mark changes from the previous filing (but not highlighted

in color). Do NOT send extra copies.

2007/2008 Changes in California Franchise Registration Requirements

Please note that the North American Securities Administrators Association, Inc.’s

(“NASAA”) Uniform Franchise Offering Circular (UFOC) disclosure document format is

valid until June 30, 2008, regardless of when the registration was approved in California.

The Federal Trade Commission has withdrawn permission from all franchisors to use the

UFOC disclosure document prepared under the current NASAA UFOC Guidelines after

June 30, 2008.

On and after July 1, 2008, all franchisors must use a franchise disclosure document that

complies with the FTC Franchise Rule, 16 CFR 436, as amended, 72 FR 15444 (March

30, 2007), (the "FTC Franchise Rule"). In its June 22, 2007 Interim Franchise Statement

of Policy, NASAA incorporated the disclosures required under the FTC Franchise Rule

for the Uniform Franchise Disclosure Document (“UFDD”). The California Department of

Corporations announced in its June 28, 2007 Release 17-F that the Department would

begin accepting the UFDD as of July 1, 2007 and that on/after July 1, 2008, only the

UFDD can be used to offer and sell franchises in California regardless of when a UFOC

may have been registered. All registered franchisors wanting to offer or sell franchises

on and after July 1, 2008 must file the UFDD as a part of its 2007/2008 application

process or file and have approved a post-effective amendment application with the

UFDD before any franchises can be offered or sold on or after July 1, 2008. Therefore,

be advised that no UFOC may be distributed to prospective franchisees after July 1,

2008 under any circumstances.

In addition, the following new items are being added to the California Special Instructions

of the soon to be released 310.111 UFDD Packet (10/07), which will include fillable

franchise forms available from our website. See

http://www.corp.ca.gov/forms/securities.asp




7. NOTE: Civil Code §1189 requires that any notary’s certificate of acknowledgment

taken within this state must be in the form attached. Any certificate of acknowledgment

taken in another state shall be sufficient in California if it is taken in accordance with the

laws of the state where the acknowledgment is made. In that instance only, the current

NASAA form would be acceptable in California.

8. As of January 1, 2008, California Corporations Code Section 31119 requires that

the offering circular together with all proposed agreements relating to the sale of the

franchise be delivered to prospective franchisees at least 14 days prior to execution by

the prospective franchisee of any binding franchise or other agreement, or at least 14

days prior to the receipt of any consideration, whichever occurs first.

9. As of January 1, 2008, California Corporations Code Section 31155 requires that

all applicants for registration, except for California corporations, California limited

partnerships, or California limited liability companies, file an irrevocable consent

appointing the Commissioner to be the applicant’s attorney to receive service of any

lawful process in any non-criminal suit, action, or proceeding against the applicant which

arises under the Franchise Investment Law.

10. As of July 1, 2008, only the UFDD can be used as the offering document to offer

and sell registered franchises in California, regardless of when the franchisor registered

its franchise system and regardless of any prior registration involving a UFOC


Hawaii

Key Websites:

http://hawaii.gov/dcca/sec/registration_forms

http://www.ftc.gov/bcp/franchise/netdiscl.shtm

Primary contact:

Call (808) 587-7400.

Department of Commerce, Franchise and Securities Division: 808-586-2722

STATE OF WASHINGTON

DEPARTMENT OF FINANCIAL INSTITUTIONS

SECURITIES DIVISION

PO Box 9033

Olympia, WA 98501-9033

(360) 902-8760

Registration Fee:

Registration of an offer or sales of franchise: $250.00

Registration renewal statement or annual report: $250.00

Franchise Registration Application Instructions

ATTACHMENT TO APPLICATION FOR FILING OF FRANCHISE OFFERING CIRCULAR

(Information required by the Act together with information prescribed by the Director)

The following information shall be contained in the offering circular:

1. Identity and business experience of persons affiliated with the franchisor. List by name and

position held, the directors, trustees and/or general partners, as the case may be, and the

principal officers (including the chief executive, and chief operating officer, financial,

franchise marketing, training and service officers) and other executives or subfranchisors

who will have management responsibility in connection with the operation of the franchisor's

business relating to the franchises offered by this offering circular. With regard to each

person listed, state their principal occupations and employers during the past five years.

2. Information on franchisor and persons affiliated with franchisor. A statement stating whether

any person identified in question 5 above has within 10 years:

http://hawaii.gov/dcca/sec/registration_forms

http://www.ftc.gov/bcp/franchise/netdiscl.shtm


A. Been found guilty of a felony or held liable in a civil action by final judgement if the civil

action involved a fraud, embezzlement, fraudulent conversion, or misappropriation of

property; or

B. Is subject to any currently effective order of the Securities and Exchange Commission

or the securities administrator of any state denying registration to or revoking or

suspending the registration of such person as a securities broker or dealer or

investment advisor or is subject to any currently effective order of any national security

association or national securities exchanges (as defined in the Securities and

Exchange Act of 1934) suspending or expelling such person from membership of such

association or exchange; or

C. Is subject to any currently effective order or ruling of the Federal Trade Commission or

is subject to any currently effective order relating to business activity as a result of an

action brought by any public agency or department. Such statement shall set forth the

court, the date of conviction or judgement, any penalty imposed or damages assessed,

or the date, nature and issue of such order.

7. A statement of when, where, and how long the franchisor has:

A. Conducted a business of the type to be operated by the franchisees;

B. Has granted franchises for such business; and

C. Has granted franchises in other lines of business.

1. Attach financial statements of the franchisor as prescribed by Rule 2.1.C or the Rules and

Regulations.

2. A copy of the typical franchise contract or agreement proposed for use in this state.

3. A statement of the franchise fee charged, the proposed application of the proceeds of the

fee by the franchisor, and the formula by which the amount of the fee is determined if the fee

is not the same in all cases.

4. A statement describing a payment of fees other than franchise fees that the franchisee or

subfranchisor is required to pay to the franchisor including royalties and payments or fees

which the franchisor collects in whole or in part on behalf of a third party or parties.

5. A statement of the conditions under which the franchise agreement may be terminated or

renewed or renewal refused, or repurchased at the option of the franchisor.

6. A statement of the conditions under which the franchise may be sold, transferred, or

assigned.

7. A statement of the conditions imposed by the franchisor whether by the terms of the

franchise agreement or by other device or practice whereby the franchisee or subfranchisor

is required to purchase services, supplies, products, fixtures, or other goods relating to the

establishment or operation of the franchise business from the franchisor or his designee.

Rev. 03/04 (OVER)

1. A statement of any restriction or condition imposed by the franchisor whether by the terms of

the franchise agreement or by other device or practice whereby the franchisee is limited or

required in the goods and services offered by him.

2. A statement of the terms and conditions of any financing arrangements when offered directly

or indirectly by the franchisor or his agent or affiliate.


3. A statement of any intent of the franchisor to sell, assign, or discount to a third party any

note, contract, or other obligation of the franchisee in whole or in part.

4. A copy of any financial statement prepared for presentation to prospective franchisees or

other persons together with a statement setting forth the basis for such statements.

5. A statement of the number of franchise businesses in each of the following categories which

within the three-year period preceding the date of the offering circular have:

A. Been canceled or terminated by either the franchisor or franchisee;

B. Not been renewed by either the franchisor or franchisee;

C. Been reacquired through purchase by the franchisor;

D. Been otherwise reacquired by the franchisor; and

E. Been transferred or sold by the franchisee to persons other than a corporation or other

business entity controlled by the transferring or selling franchisee.

1. A statement describing the training program, supervision, and assistance the franchisor has

and will provide the franchisee.

2. A statement as to whether franchisees or subfranchisors receive an exclusive area or

territory.

3. A statement of any compensation or other benefit given or promised to a public figure

arising, in whole or in part, from (A) the use of the public figure in the name or symbol of the

franchise or (B) the endorsement or recommendation of the franchise by the public figure in

advertisements.

4. Registration of franchises in other states. List the following:

A. The states in which this filing is effective.

B. The states in which this filing is or will be shortly on file.

C. The states, if any, which have refused, by order or otherwise, to register these

franchises.

D. The states, if any, which have revoked or suspended the right to offer these franchises.

E. The states, if any, in which the filing of these franchises has been withdrawn.

1. Other franchises sold. (Describe in summary form the number of franchises presently

operating, names, and addresses of such franchises operating in Hawaii.)

2. Performance by franchisor. Describe succinctly the obligations required to be performed by

the franchisor prior to the opening of the franchised business. Indicate whether such

obligations must be completed within a specified time period and the right of franchisees, if

any, to any refund of fees paid if such obligations are not complete within the prescribed

time.

3. When the person selling the franchise is a subfranchisor, the offering circular shall also

include the same information concerning the subfranchisor as is required from the franchisor

pursuant to this subsection.

4. Attach the Consent to Service of Process if applicant is not a Hawaii corporation.